Michael Mulcahy (Dublin South Central, Fianna Fail)

I read with interest the pre-budget outlook document. I commend this approach which was also adopted last year and I look forward next year to a unified budget and Estimates on the same day. If the Irish economy were a patient going to visit a doctor, the doctor would diagnose it as being in rude good health. Growth rates this year are 4.75% and next year will be 3.25%. The unemployment rate is between 4.5% and 5.5%; inflation is lower than 2%; total national debt is approximately 25% of GDP; approximately €17 billion is in the pension reserve fund. By any international comparison, the state of the Irish economy is very sound indeed.

If it was all rosy in the garden, there would be no point in listening to the constructive suggestions that it is to be hoped will come from both sides of the House. I acknowledge that more needs to be done.

I am glad to see no sign of ministerial complacency in the document. In the Minister's summary, he states, "For a small, trading nation such as Ireland, long-term sustainable increases in living standards can only be attained through supplying goods and services to the global economy." He also states:

The challenge will continue to be the re-positioning of the economy in the production of knowledge-intensive goods and services. In addition, increased costs in the domestic economy have reduced competitiveness. It is vital that costs across the economy, including pay costs, are curtailed.

The Minister sets out in a clear manner the fact that the future of the Irish economy will depend on our competitiveness which, in turn, will depend on controlling our cost base. The total budget proposed for next year is approximately €58 billion, an extremely large sum. The tax revenue for this year will fall slightly short and some commentators suggest we should make up the difference by increasing taxation. As somebody who has been in politics since 1985 and who lived through an era of high taxation and low growth, I believe this would be entirely the wrong path to follow. We should maintain a dynamic and growth-oriented economy. The best way to do this and the key to success is to keep taxes low and to reward hard work and enterprise.

We are part of a world economy and as was referred to by Deputy Kieran O'Donnell we cannot ignore winds of change blowing across the world. If the price of oil experiences a large spike or the US experiences a recession it has a knock-on effect on the Irish economy. People will recall the sharp downturn after the attacks on 11 September 2001. Because the Government cut back it was able to rebound in 2003, 2004 and 2005. Only by being prudent did we come through this period and keep the economy on a sound footing. If another such downturn occurs, and the stock markets have experienced major volatility during recent months, the Minister should be prudent and err on the side of caution.

In the pre-budget outlook, the Minister states a key item with regard to competitiveness is wage costs. I will highlight other costs. The cost of land in Ireland is prohibitively expensive because we failed to implement a proper land use policy. The IDA and other such agencies seem to believe that Ireland consists of Dublin and the greater Dublin region. Ireland consists of far more than this and we need to develop more seriously and dynamically other regions where land is significantly cheaper and where people can buy homes and live more cheaply. This will have an effect on the cost of labour.

The cost of services is prohibitive. The cost of telephones, broadcasting and energy are all extremely high by international standards. The major work of the Government during this Dáil session must be to radically tackle the lack of real competition in these sectors. Why do we have a limit on the number of radio and television stations and mobile phone operators? Why do we maintain these false economies? As in other sectors, it should be open to every properly and professionally organised company to enter any of these industries without putting a cap on the number of operators. It is time we had a real competitive agenda in this regard.

The Estimates amount to approximately €58 billion, an increase of approximately 30% on the 2005 figure. By any stretch of the imagination this is a large increase. Next year, the allocation for health will be €1 billion more than the 2007 allocation and the allocation for education will be €500 million more than the 2007 allocation. This does not allow room for criticism. The Garda Síochána will receive an 8% increase over the 2007 allocation. The Government has made clear the fight against crime and the resourcing of gardaí is a top priority.

The allocation for international co-operation, a subhead of foreign affairs, amounts to €730 million, a large figure I wish to bring to the attention of the House. We all support this figure because we all agree that by 2012, Ireland should reach the UN target of providing 0.7% of GDP in foreign aid. However, it is worth noting the figure for international aid is almost the same as the figure for total capital spending in education and science for the same year. I do not criticise this. I strongly believe in achieving the UN target. I simply state it is a large sum of money.

I am not satisfied that these amounts are properly or adequately scrutinised by the relevant Oireachtas committees. I accept the Committee of Public Accounts does an excellent job when it examines particular issues from time to time. When one has such large amounts of money a strong case can be made for beefing up the expertise on all of these committees so they can scrutinise with a greater level of detail the expenditure of their corresponding Departments. The figure for international aid will be scrutinised by the Joint Oireachtas Committee on Foreign Affairs. A strong case could have been made to establish a committee on foreign aid to scrutinise what is becoming a large sum of money.

I support the drive for a more competitive economy. The Tánaiste and Minister for Finance, Deputy Cowen, will proceed with great caution and prudence. In the long term this is the best way to go. However, we need greater scrutiny of all expenditure and the programme of the 30th Dáil should concentrate on bringing a more dynamic and competitive aspect to all of the costs in the economy.

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